TaxTMI 
TaxTMI 
1994 (11) TMI 364
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....ried on by the statutory authority or private builder or contractor came within the purview of the Act only after its amendment by the Ordinance No. 24 in 1993 or the Commission could entertain a complaint for such violations even before. 2. How the dispute arose in different appeals is not of any consequence except for two appeals which shall be adverted to later, for determining right and power of the Commission to award exemplary damages and accountability of the statutory authorities. We therefore come straight away to the legal issue involved in these appeals. But before doing so and examining the question of jurisdiction of the District Forum or State or National Commission to entertain a complaint under the Act, it appears appropriate to ascertain the purpose of the Act, the objective it seeks to achieve and the nature of social purpose it seeks to promote as it shall facilitate in comprehending the issue involved and assist in construing various provisions of the Act effectively. To begin with the preamble of the Act, which can afford useful assistance to ascertain the legislative intention, it was enacted, 'to provide for the protection of the interest of consumer....
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....words or phrases occurring in the body of the statute, and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural, import, but also those things which the definition clause declares that they shall include." It has been approved by this Court in Regional Director, Employees State Insurance Corpn. v. High Land Coffee Works of P.F.X. Saldanha and Sons (1991) 3 SCC 617; CIT v. Taj Mahal Hotel, Secunderabad (1971) 3 SCC 550 and State of Bombay v. Hospital Mazdoor Sabha AIR 1960 SC 610: (1960) 2 SCR 866: (1960) 1 LLJ 251 . The provisions of the Act thus have to be construed in favour of the consumer to achieve the purpose of enactment as it is a social benefit oriented legislation. The primary duty of the court while construing the provisions of such an Act is to adopt a constructive approach subject to that it should not do violence to the language of the provisions and is not contrary to the attempted objective of the enactment. 3. Although the legislation is a milestone in the history of socioeconomic legislation and is directed towards achieving public benefit we shall first examine if on....
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....re enacted." The Act opts for no less wider definition. It reads as under: consumer' means any person who,- (i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or (ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person; [Explanation.- For the purposes of sub-clause (i), 'commercial purpose' does not inc....
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....etc. and therefore they claimed deficiency in service rendered by the appellants. Whether they were justified in their complaint and if such act or omission could be held to be denial of service in the Act shall be examined presently but the jurisdiction of the Commission could not be ousted (sic merely) because even though it was service it related to immoveable property. 4. What is the meaning of the word 'service'? Does it extend to deficiency in the building of a house or flat? Can a complaint be filed under the Act against the statutory authority or a builder or contractor for any deficiency in respect of such property. The answer to all this shall depend on understanding of the word 'service". The term has variety of meanings. It may mean any benefit or any act resulting in promoting interest or happiness. It may be contractual, professional, public, domestic, legal, statutory etc. The concept of service thus is very wide. How it should be understood and what it means depends on the context in which it has been used in an enactment. Clause (o) of the definition section defines it as under: "service' means service of any description which is made available to....
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....ubtedly render service. A State Bank or nationalised bank renders as much service as private bank. No distinction can be drawn in private and public transport or insurance companies. Even the supply of electricity or gas which throughout the country is being made, mainly, by statutory authorities is included in it. The legislative intention is thus clear to protect a consumer against services rendered even by statutory bodies. The test, therefore, is not if a person against whom complaint is made is a statutory body but whether the nature of the duty and function performed by it is service or even facility. 5. This takes us to the larger issue if the public authorities under different enactments are amenable to jurisdiction under the Act. It was vehemently argued that the local authorities or government bodies develop land and construct houses in discharge of their statutory function, therefore, they could not be subjected to the provisions of the Act. The learned counsel urged that if the ambit of the Act would be widened to include even such authorities it would vitally affect the functioning of official bodies. The learned counsel submitted that the entire objective of the Ac....
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....ion' in the definition of "service" by Ordinance No. 24 of 1993. As pointed out earlier the entire purpose of widening the definition is to include in it not only day to day buying and selling activity undertaken by a common man but even such activities which are otherwise not commercial in nature yet they partake of a character in which some benefit is conferred on the consumer. Construction of a house or flat is for the benefit of person for whom it is constructed. He may do it himself or hire services of a builder or contractor. The latter being for consideration is service as defined in the Act. Similarly when a statutory authority develops land or allots a site or constructs a house for the benefit of common man it is as much service as by a builder or contractor. The one is contractual service and other statutory service. If the service is defective or it is not what was represented then it would be unfair trade practice as defined in the Act. Any defect in construction activity would be denial of comfort and service to a consumer.When possession of property is not delivered within stipulated period the delay so caused is denial of service.Such disputes or claims are not in r....
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....indicates that the definition is not exhaustive. The inclusive clause succeeded in widening its scope butnot exhausting the services which could be covered in earlier part. So any service except when it is free of charge or under a constraint ofpersonal service is included in it. Since housing activity is a service it was covered in the clause as it stood before 1993. 7. In Civil Appeal No. 2954 filed by a builder it was urged that inclusion of 'housing construction' in clause (o) and 'avail' in clause (d) in 1993 would indicate that the Act as it stood prior to the amendment did not apply to hiring of services in respect of housing construction. Learned counsel submitted that in absence of any expression making the amendment retrospective it should be held to be prospective as it is settled that any law including amendments which materially affect the vested rights or duties or obligations in respect of past transactions should remain untouched. Reliance was placed on Jose Da Costa v. Bascora Sadasiva Sinai Narcornim (1976) 2 SCC 917 ; State of M.P. v. Rameshwar Rathod (1990) 4 SCC 21 : 1990 SCC (Cri) 522: AIR 1990 SC 1849 and Pulborough School Board Election cas....
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....liable to compensate for loss or in' jury suffered by a citizen due to arbitrary actions of its employees. In State of Gujarat v. Memon Mahomed Haji Hasam AIR 1967 SC 1885 : (1967) 3 SCR 938 the orderof the High Court directing payment of compensation for disposal of seized vehicles without waiting for the outcome of decision in appeal was upheld both on principle of bailee's 'legal obligation to preserve the property intact and also the obligation to take reasonable care of it ... to return it in the same condition in which it was seized' and also because the Government was, 'bound to return the said property by reason of its statutory obligation or to pay its value if it had disabled itself from returning it either by its own act or by act of its agents and servants'. It was extended further even to bona fide action of the authorities if it was contrary to law in Lala Bishambar Nath v. Agra Nagar Mahapalika, Agra (1973) 1 SCC 788 : AIR 1973 SC 1289.It was held that where the authorities could not have taken any action against the dealer and their order was invalid, 'it is immaterial that the respondents had acted bonafide and in the interest of preservation of public health. Thei....
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....an action does lie for doing what the Legislature has authorised, if it be done negligently." Under our Constitution sovereignty vests in the people. Every limb of the constitutional machinery is obliged to be people oriented. No functionary in exercise of statutory power can claim immunity, except to the extent protected by the statute itself. Public authorities acting in violation of constitutional or statutory provisions oppressively are accountable for their behaviour before authorities createdunder the statute like the commission or the courts entrusted with responsibility of maintaining the rule of law. Each hierarchy in the Act is empowered to entertain a complaint by the consumer for value of the goods or services and compensation. The word compensation' is again of very wide connotation. It has not been defined in theAct. According to dictionary it means, 'compensating or being compensated; thing given as recompense;'. In legal sense it may constitute actual loss or expected loss and may extend to physical, mental or even emotional suffering, insult or injury or loss. Therefore, when the Commission has been vested with the jurisdiction to award value of goods or services a....
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....was not handing over possession nor they were completing the formalities and the work was still incomplete. The State Commission by its order dated February 15, 1990 directed the appellant to pay 12% annual simple interest upon the deposit made by the respondent for the period January 1, 1989 to February 15, 1990.The appellant was further directed to hand over possession of the flat without delay after completing construction work up to June 1990. The Commission further directed that if it was not possible for the appellant to complete the construction then it should hand over possession of the flat to the respondent by April 5,1990 after determining the deficiencies and the estimated cost of such deficient construction shall be refunded to the respondent latest by April 20, 1990. The appellant instead of complying with the order approached the National Commission and raised the question of jurisdiction. It was overruled. And the appeal was dismissed. But the cross- appeal of the respondent was allowed and it was directed that since the architect of the appellant had estimated in October 1989 the cost of completing construction at Rs 44,615 the appellant sha....
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....ausing injury." (p. 777) The jurisdiction and power of the courts to indemnify a citizen for injury suffered due to abuse of power by public authorities is founded as observed by Lord Hailsham in Cassell & Co. Ltd. v. Broome 1972 AC 1027 (1972) 1 All ER 801 on the principle that, an award of exemplary damages can serve a useful purpose in vindicating the strength of law'. An ordinary citizen or a common man is hardly equipped to match the might of the State or its instrumentalities. That is provided by the rule of law. It acts as a check on arbitrary and capricious exercise of power. In Rookes v. Barnard 1964 AC 11 29 (1964) 1 All ER 367, 410 it was observed by Lord Devlin, 'the servants of the government are also the servants of the people and the use of their power must always be subordinate to their duty of service'. A public functionary if he acts maliciously or oppressively and the exercise of power results in harassment and agony then it is not an exercise of power but its abuse. No law provides protection against it. He who is responsible for it must suffer it. Compensation or damage as explained earlier may arise even when the officer discharges his duty honestl....
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....esses, which was then unpopular with the authorities. It was observed that, 'what could be more malicious than to punish this licensee for having done what he had an absolute right to do in a matter utterly irrelevant to the Alcoholic Liquor Act? Malice in the proper sense is simply acting for a reason and purpose knowingly foreign to the administration, to which was added here the element of intentional punishment by what was virtually vocation outlawry.' In Smith v. East Elloe Rural District Council 1956 AC 736: (1956) 1 All ER 855 the House of Lords held that an action for damages might proceed against the clerk of a local authority personally on the ground that he had procured the compulsory purchase of the plaintiff's property wrongfully and in bad faith. In Farrington v. Thomson 1959 UR the Supreme Court of Victoria awarded damages for exercising a power the authorities knew they did not possess. A licensing inspector and a police officer ordered the plaintiff to close his hotel and cease supplying liquor. He obeyed and filed a suit for the resultant loss. The Court observed: "Now I take it to be perfectly clear, that if a public officer abuses his office, either by ....
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....ty in respect of injuries suffered by him for capricious exercise of power and the National Commission finds it duly proved then it has a statutory obligation to award the same. It was never more necessary than today when even social obligations are regulated by grant of statutory powers. The test of permissive form of grant is over. It is now imperative and implicit in the exercise of power that it should be for the sake of society. When the court directs payment of damages or compensation against the State the ultimate sufferer is the common man. It is the tax payers' money which is paid for inaction of those who are entrusted under the Act to discharge their duties in accordance with law. It is, therefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of course should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by divid....
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.... courtyards of such structure) in the area on which the structure stood?" The Presidential reference sets out the nature of dispute, the location of its area and the adverse consequence thereof and then proceeds to state that with a view to maintenance of public order and communal harmony in the country in the area vested in the Central Government by virtue of the acquisition, it is necessary to seek this Court's opinion on the question referred under Article 143(1). The Ordinance has since become an Act. 3. On receipt of the Presidential reference this Court gave detailed directions by its order dated January 27, 1993. In that order this Court pointed out that in its opinion 'it would be desirable to hear the preliminary objections at the threshold' but realising the urgency of the matter we also gave directions inviting response on the merits of the reference. Thus by the said order we indicated that we will hear the preliminary objection regarding the maintainability, competence and desirability of answering the reference first in point of time. 4. After the issuance of the Ordinance it appears that in the pending suits renumbered o.b.s. Nos. 3 and 4 of 1989 th....
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....titioner of the Writ Petition No. 552 of 1993 Dr Ismail Farooqui stated that he had no objection to the transfer but others had. When the petition came up for hearing before this Bench on September 21, 1993 none of the other petitioners to the writ petitions pending in the High Court was present to object to the transfer. The only objection, if any, came from Mr Abdul Mannan, learned counsel representing the plaintiff in Suit No. 4 of 1989. His submissions were twofold, namely, (i) the suits had progressed for several years in the High Court and it would be unwise to abate them since the question of title will have to be gone into in any case for determining the owner/occupant entitled to compensation for the acquired land and (ii) the High Court is competent to decide the question of the constitutional validity of the impugned law and had done it on the earlier occasion when the State Government's acquisition was struck down. The question whether the Central Government's decision to abate the suits was wise or not is not germane at present and at any rate that is a policy matter on which we need not say anything at this stage. Ordinarily, we may have allowed the High Court to go a....